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State-owned telecom operators - Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) - are reportedly in talks with private players to share spectrum in a bid to reduce losses and improve their revenues.

"We are talking to two-three private operators. We have unutilised spectrum in many locations, in different circles," a senior BSNL official told Business Standard.

While MTNL provides telecom services in Delhi and Mumbai, BSNL offers services in the rest of the country. Due to intense competition in the telecom space, both the public sector operators have been struggling, incurring huge losses for the past few years.

BSNL had posted a loss of Rs 7,600 crore for the financial year ending 31st March 2015, while MTNL's loss stood at Rs 745 crore in the first quarter of the current financial year.

Sharing spectrum with the two government-owned telcos is expected to assist private operators to address rising call drop issues. It will enable them to use their spectrum efficiently.

In a bid to address the growing furore over increasing call drops, the telecom regulator has recently recommended operators to provide compensation to users for each dropped call. The Telecom Regulatory Authority of India (TRAI) has asked the operators to offer a compensation of Re 1 for each call drop.

With the government giving its green signal for spectrum sharing, many companies have intensified their talks for such an arrangement, said the BSNL official.

Nevertheless, the government has to ease the spectrum cap limits in order to enable spectrum sharing between two major telecom operators.

As per the existing rules, an operator is not permitted to have over 25% of the spectrum allotted to all operators "in a particular circle or more than 50% of spectrum assigned in a particular frequency band."

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